Climate Crisis May Direct Millions of Resources to Corn-Based Ethanol Production in the Amazon

Brazil [South America]: Bruce Rastetter, the prominent American agribusiness mogul who currently heads the largest Corn-based Ethanol producer in Brazil, intends to boost processing capacity at his plants threefold by capitalizing on green credits and incentives aimed at combating climate change. Through FS Agrisolutions, Rastetter's enterprises secured over 2.2 billion reais ($459 billion) in offsets and credits for environmental compliance in 2021 and 2022. The funds were allocated to his Ethanol facilities in Mato Grosso, in addition to resources from the National Economic and Social Development Bank (BNDES). The company aims to further enhance its operations by branding itself as a negative Carbon entity, pledging to introduce a Carbon capture system for storing emissions from plants beneath the earth's surface.

The Intergovernmental Panel on Climate Change (IPCC) acknowledged CCS (Carbon capture and storage) as a viable option for mitigating climate change. However, the system has yet to demonstrate effectiveness at a large scale over the years. Recent IPCC bulletins caution that Carbon capture is facing viability limitations such as high implementation costs and adverse impacts on human rights and ecosystems.

Bruce Rastetter aims to implement in Brazil a system like the Midwest Carbon project he leads in the US, pledging to capture 12 million tons of Carbon from Ethanol plants. The gas would be captured across five states and transported through pipelines spanning over 3,000 kilometers (1,860 miles) to North Dakota, where it will be injected into geological structures.

FS has obtained a license to drill in Lucas do Rio Verde, Mato Grosso, to assess the potential for injectivity. The area is situated at the intersection of the endangered Pantanal, Amazon, and Cerrado biomes, where Rastetter has plants.

The Amazon and Pantanal prohibit sugar cane cultivation to prevent Ethanol production from promoting deforestation and encroachment on protected areas. As a result, Corn has replaced sugar cane, particularly in Mato Grosso. Corn production has grown more than four times in just over a decade, from 9.58 million tons in 2011-12 to over 46 million tons anticipated in the 2022-23 season.

Approximately 80% of Brazil's Corn-based Ethanol is supplied by 11 plants in the state. The plantations of Corn, sugar cane, and palm in rainforest areas have not lived up to their promises of clean production. These plantations have caused deforestation and failed to fix Carbon, which makes Corn a substitute for biofuels since sugar cane is prohibited in the Amazon and the Pantanal. Despite being touted as environmental solutions, they cannot be sold as such. In just five years, the national market for Corn-based Ethanol has grown by 800%, with FS now competing against giants in the sugar-alcohol sector like Raizen and BP Bunge as the fourth-largest producer of biofuels in the country. With a third plant recently opened in Primavera do Leste, another city in Mato Grosso state, and more units planned, FS has no plans to slow its demand for Corn plantations and planted forests, which are used to fuel boilers that produce Ethanol, energy, and animal feed.

The company plans to expand its Ethanol production from 1.4 billion liters (370 million gallons) to 5 billion liters (1.32 billion gallons) by 2026, marking a threefold increase. The country's Ethanol production to reach 9.1 billion liters (2.4 billion gallons) by 2032. The company defends its green certificates by stating that a significant proportion of its Corn processing uses interim harvests, which share the same land as Soybeans from the first harvest, thus having less farming impact than a complete soil change. Currently, temporary plantations like Soybeans and Corn cover 12 million hectares (29.6 million acres) in Mato Grosso, exceeding the area of Amapa state. Over the past two decades, half of these plantations, or 6 million hectares (14.8 million acres), were established in deforested regions. Although FS claims to strictly monitor the sustainability practices of its Corn and eucalyptus suppliers, O Joio e O Trigo found that the company's Brazilian executives are linked to illegal deforestation in Mato Grosso and Amapa, both states where FS operates.

Deforestation in areas within a 150-kilometer radius of FS's plants in Mato Grosso has destroyed 1.2 million acres of rainforests over the past five years. These perimeters are crucial for the company's production inputs, and they include Indigenous Lands and Conservation Units. Ferrante argues that the same reasons that led to the prohibition of cane cultivation for biofuels in the Brazilian Amazon are applicable to Corn, mainly because the crops endanger biodiversity, affecting not only the cultivated areas but also the rainforests. Expanding biofuels into native forests could escalate climate change and cause more deforestation, ultimately increasing Carbon emissions.

Corn has become a problematic crop that triggers deforestation in both rainforests and plantations. This type of farming raises significant concerns, and the energy transition must be planned in a way that doesn't burden biofuel production in areas such as the Pantanal and the Amazon. In 2019, former President Jair Bolsonaro lifted the ban on sugar cane cultivation in the Amazon and the Pantanal through a decree. However, Ferrante's studies that demonstrated the impracticality of bioenergy projects in the Brazilian Amazon formed the basis of a civil lawsuit that upheld the moratorium. Currently, fossil fuels are more commonly used to produce Corn. One of the main issues with biofuel generation is that expansion plans involve deforesting the western part of the rainforest, which is essential to the rain cycle for the entire continent.

Brazil's top priority is to reduce emissions and immediately halt deforestation. The country has immense potential in wind and solar energy, which must be harnessed to supplant non-emission-reducing projects.

FS Bioenergia has one of the lowest production costs among all plants in the country. FS Bioenergia is the outcome of a union between Rastetter and influential entrepreneurs from the Brazilian agribusiness sector, including some of the most extensive landholders in the Amazon region such as Miguel Vaz Ribeiro, the mayor of Lucas do Rio Verde city, and Marino Franz, the former mayor of the same city. The partnership between the Summit group, who are the controllers of Corn-based Ethanol plants in the U.S., and Tapajos Participacoes S.A., owned by Brazilian businessmen, is intricate, and it involves over a dozen legal entities in Brazil and abroad.

As per the Federal Prosecutor’s Office, illegal deforestation was discovered in Tartarugalzinho and the capital city of Amapa, Macapa, that aligned with the company's interests in Soybean and Corn plantations. The company was fined almost 20 million reais ($4 million) for this violation. In 2015, Rastetter praised the location of Amapa for business due to its easy access to transport products to the United States, Europe, and Asia. Companies involved in Carbon capture projects can raise millions, leading to a rush to construct pipelines and associated premiums.

The Summit Agricultural Group has a $4.5 billion project aimed at capturing and preserving Carbon in the US. The initiative has garnered significant investments and public subsidies, but it has also sparked fierce opposition from Indigenous groups, environmentalists, landowners, and farmers in the region. As of December 2022, there were 30 active Carbon capture projects worldwide, with another 10 under construction and over 150 being developed across more than 20 countries. Only eight of these projects utilized renewable sources for energy and Ethanol production, including a UK-based pilot project by Drax that involves burning wood and relies on substantial government investments.

The US federal government is offering substantial subsidies to Carbon capture projects like Rustetter's, providing $85 per ton of CO₂ permanently stored and $60 per ton for advanced petroleum recovery, subject to proof of reductions. Should Summit's Carbon storage projections be proven accurate, the project could potentially receive $600 million annually in federal fiscal credits. Over the course of 12 years, the project could earn up to $7.2 billion in fiscal credits, which is more than enough to cover the pipeline cost of $4.5 billion. In Brazil, RenovaBio offers an additional 20% bonus in credits to those who can demonstrate negative emissions. However, businessmen involved in the project are aiming to attract larger sums through sectoral regulation.